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Shares in Cablevision Systems (CVC) wavered Thursday as investors sorted through a mixed bag of news from the company.

Reporting results for the third quarter ended Sept. 30, the New York-based cable TV system operator reported improving system cash flow and better-than-expected results from its Rainbow programming operations.

But weighing against those positives were softening cable revenue growth and continued uncertainty over how Cablevision's satellite TV plans will eat into the company's future cash flows.

Around midday Thursday, Cablevision's shares were trading at $15.20, down 35 cents. Shares are down two-thirds from their 52-week highs, but have tripled since a mid-August meeting with analysts left Wall Street skeptical about the company's ability to finance its operations in 2003 and beyond.


For the third quarter, Cablevision's telecommunications services operations, primarily the company's cable TV systems, reported 9% growth over the pro forma figure for the third quarter of 2001. What the company calls "adjusted operating cash flow" -- operating profit before depreciation and amortization, excluding restructuring charges and certain compensation expense -- grew 17%.

The trend of disappointing system revenue alongside improved cash flow is having a noticeable effect on Cablevision's full-year results. The company lowered guidance for 2002 telecommunications revenue growth from a range of 10% to 12% to a range of 9% to 11%. But guidance for cash flow growth edged higher, from 15% to a range of 15% to 16%.

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Behind the stronger cash flow numbers are cost cuts and better-than-forecast customer acceptance of high-speed Internet service and advanced digital video. The company raised subscription targets for both products for the year. Companywide, Cablevision cut its head count by 2,400 in the quarter.

Easy as DBS

The company's core programming assets, including the AMC movie channel, two regional sports channels and the soon-to-be-sold Bravo, showed a revenue increase of 21% for the third quarter and adjusted operating cash flow gain of 27%.

As indications of Cablevision's improved financial strength, executives cited the pending sale of Bravo to

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NBC and the recently announced purchase by media maven Steven Rattner of $75 million in Cablevision preferred stock.

But investors are still worrying about how much money Cablevision might sink into its fledgling direct broadcast satellite business. The company, which has an FCC license to offer a DBS service, plans to launch the necessary satellite next March, and says it will be able to keep the business operational for the first half of next year with an investment of $75 million. But Cablevision President Jim Dolan refused to hint whether, in fact, Cablevision will invest further to launch its own service, or sell the business to someone else.